The Malaysian manufacturing sector in November 2024 eased with the seasonally adjusted S&P Global Malaysia Manufacturing Purchasing Managers’ Index decreasing to 49.2 compared to October at 49.5. A small drop like this simply means a small deceleration and is still only a shade below that neutral threshold of 50 that splits expansion from contraction.
Malaysia’s manufacturing sector is expected to experience growth for the fourth quarter of 2024, though not at the same rate. S&P Global believes that PMI historical correlation with the official GDP data has revealed subdued manufacturing production compared to the preceding quarters for the last quarter of any year. S&P Global specifically indicated that though market demand was hoped to rebound, it stated that confidence in the sector had been weak, with the optimism for output in the last stretch of the year still coming in below the long-term average of 56.2.
The November PMI report showed that the overall environment of demand in the country’s manufacturing sector is weak. The slowdown was found on the lower side in terms of new orders, output, and stock level, while employment changed at a neutral level. While the overall stagnation trend in domestic demand does have some positive news by strong overseas demand, which positively translated into new export orders of modest increase, showing a bit of relief to manufacturers who see this sluggish local condition.
On the cost side, input cost inflation eased further to a nine-month low in November, which led to a broad stagnation in output charges. This is a positive sign, but it also reflects a challenging environment for manufacturers to pass on higher costs to customers.
In addition, the work backlog of Malaysian manufacturers as a whole stabilized in general during the month, with the corresponding seasonally adjusted index having its highest level since last April. While input demand remained weak, companies still experienced longer delivery times, which posted their seventh consecutive month of delays in November.
Overall, the manufacturing sector in Malaysia still faces headwinds in terms of domestic demand, but resilience is beginning to emerge, especially from the export market, as the country heads into the final quarter of the year.
